Do investor reactions to merger announcements shape the writing of SEC filings?

Abstract

The way filings of mergers and acquisitions (M&A) with the Security Exchange Commission (SEC) are written might depend on investor reactions to initial public announcements of the deal. We examine this investor feedback hypothesis focusing on the readability and timing of a large sample of hand-collected SEC documents. The results are unambiguous: Acquirers write documents with lower readability and file them faster when investors react negatively to the deal announcement. These results are in line with strategic obfuscation efforts and robust to alternative empirical choices, such as controlling for deal complexity or the propensity of the firm to make complex disclosure and using an instrumental variables approach.

Keywords: mergers and acquisitions, SEC filings, readability, time to file, investor feedback

JEL Classification: G34, G40